The financial statements of The Ford Foundation (the Foundation) are prepared on the accrual basis. The significant accounting policies followed are described below:

INVESTMENTS:

Most investments are carried at market value, as quoted on major stock exchanges. Investments with limited marketability have been valued in the manner described below, which includes recognition of risk factors as appropriate:

• Values assigned to fixed income securities are based on market values of commercial debt instruments.

• All other securities or real estate held for investment purposes are valued at estimated realizable values.

Realized and unrealized gains or losses on investments are determined by comparison of specific costs of acquisition (identified lot basis) to proceeds at the time of disposal, or market values at the balance sheet date, respectively, and include the effects of currency translation with respect to transactions and holdings of foreign securities.

LAND AND BUILDINGS:

Land and buildings owned by the Foundation are carried at cost. Depreciation on the buildings is recorded using the straight-line method based on estimated useful lives, principally fifty years.

INCOME, EXPENDITURES, AND APPROPRIATIONS:

Grant expenditures are considered incurred at the time of approval by the Board of Trustees or the President of the Foundation. Uncommitted appropriations that have been approved by the Board of Trustees are included in the appropriated fund balance.

TAXES:

The Foundation qualifies as a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code and, accordingly, is not subject to federal income taxes. However, the Foundation is subject to a federal excise tax.

The Foundation follows the policy of providing for federal excise taxes on net appreciation (both realized and unrealized) on investments. The deferred federal excise tax in the accompanying financial statements represents taxes provided on net unrealized appreciation on investments.